Hedge Funds Boost Equity Leverage at Fastest Rate in Three Years
- Even after the jump, stock exposure is below historic average
- Sector tilt shows easing defensiveness but far from risk on
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Some of the most aggressive traders in the market are embracing stocks after avoiding them for almost a year.
Rather than bailing during rallies, hedge funds are jumping in, just as the S&P 500 Index vaults back to records. Net leverage, a measure of industry risk appetite that takes into account long versus short positions, has risen by 6.6 percentage points to 63.9% in June, on course for the biggest increase in three years, data compiled by Goldman Sachs Group Inc.’s prime brokerage unit showed. The funds started the month with the lowest leverage since 2016.